Court File and Parties

Court File No.: CV-23-00696838 Date: 2024-05-27 Ontario Superior Court of Justice

Between:

SELVAKUMAR SELLATHURAI Plaintiff – and – SAMEER THAKRAL, NIDHI THAKRAL AND RAJ. K. SHARDA Defendant

Counsel: Roy Wise, for the Plaintiff Raj Sharda, for the Defendant

Heard: May 24, 2024

Before: Papageorgiou J.

Overview

[1] This matter involves the interpretation of an Assignment Agreement.

[2] On July 20, 2020, the plaintiff purchased a home to be built by a builder for $1,757,450.98. He paid total deposits to the builder in the amount of $174,685.29 leaving a total of $1,582,765 payable to the builder at closing, subject to adjustments.

[3] On December 17, 2021, the plaintiff entered into an Assignment Agreement with the defendants. The purchase price was $2,345,000 and there were schedules that set out how the purchase price would be paid.

[4] The disputes centers on whether the Assignment Agreement required the defendants to repay the deposit paid by the plaintiff to the builder, at closing.

Decision

[5] For the reasons that follow I award the plaintiff damages in the amount of $174,685.29 as claimed.

Issues

[6] In arriving at this decision, I have considered the following issues:

Issue 1: Does the Assignment Agreement, properly construed, require the deposit paid by the plaintiff to the builder to be repaid by the defendants? If there is an ambiguity, how should this be resolved?

Issue 2: Should partial summary judgment be granted?

Analysis

The Summary Judgment Test

[7] Before addressing the issues, it is important to set out a brief recitation of the summary judgment test as follows.

[8] In accordance with r. 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), the court shall grant summary judgment if:

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[9] In determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and a judge may exercise any of the following powers under r. 20.04(2.1): (1) weighing the evidence; (2) evaluating the credibility of a deponent; and (3) drawing any reasonable inference from the evidence.

[10] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, explained:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process: (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[11] In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party cannot rest solely on allegations in a pleading. Each side must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9. Furthermore, “a summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial”: Diao v. Zhao, 2017 ONSC 5511, at para. 18.

Issue 1: Does the Assignment Agreement, properly construed, require the deposit paid by the plaintiff to the builder to be repaid by the defendants? If there is an ambiguity, how should this be resolved?

[12] It does.

Principles of Contractual Interpretation

[13] The main principles of contractual interpretation applicable in this case are as follows:

• Contractual interpretation involves a search for the objective intention of the parties based upon the words they used. A court cannot consider evidence of the parties’ subjective intentions: Corner Brook (City) v. Bailey, 2021 SCC 29, [2021] 2 S.C.R. 540 at para 25; Alberta Union of Provincial Employees v. Alberta Health Services, 2020 ABCA 4, at paras. 26-31.
• The court must “read the contract as a whole” in light of its “purpose and commercial context” and give the words “their ordinary grammatical meaning”: Corner Brook at para. 20, citing Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para 47; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, at para. 64.
• The court must give meaning to all of the agreement’s terms and avoid an interpretation that renders some terms meaningless: Bellwoods Brewery Inc. v. 1896842 Ontario Limited, 2023 ONSC 2845, at para. 13.
• Although surrounding circumstances should be taken into account, there were none referenced by the parties or relevant to the issue before me that arose from the materials.
• Where there is ambiguity, a court may have regard to the parties’ subsequent conduct: Montreal Trust Co. of Canada v. Birmingham Lodge Ltd (1995), 24 O.R. (3d) 97 (C.A.), at para. 23; Thunder Bay (City) v. Canadian National Railway Company, 2018 ONCA 517, 424 D.L.R. (4th) 588, at paras. 62-63; London Medical and Dental Building Ltd. v. Middlesex Condominium Corp. No. 83, 2016 ONSC 6141, at paras. 93-95; Newman v. Beta Maritime Ltd, 2018 BCSC 1442, at paras. 31-32; Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912, 404 D.L.R. (4th) 512.

The Assignment Agreement

[14] The Assignment Agreement is on a pre-printed OREA form with schedules attached.

[15] At the time of the Assignment Agreement, the defendant, Mr. Thakral was a real estate agent, and the plaintiff was studying to become a real estate agent. As such, they were both relatively sophisticated in the matter of real estate transactions.

[16] There is no dispute that Mr. Thakral prepared the initial Assignment Agreement, but it was amended, and the amendments are initialed by both parties.

[17] The purchase price was $2,345,000 and the defendants agreed to “pay the balance as more particularly set out in Schedules A and B.”

[18] Schedule A further sets out that the defendants “will deliver the balance of payment for this Assignment Agreement as more particularly set out in item 6 on Schedule B, subject to adjustments…”

[19] Schedule B set out as follows:

1. Total Purchase Price including original Agreement of Purchase and Sale and this Assignment $2,345,000
2. Purchase Price of original Agreement of Purchase and Sale as indicated in Schedule C $1,757,450
3. Deposit(s) paid by Assignor to the seller under the original Agreement of Purchase and Sale as indicated in Schedule C, to be paid by the Assignee to the Assignor as follows: Upon acceptance of this Agreement: $200,000, Additional on receipt of consent to assign: $150,000 $174,685
4. Payment by Assignee to Assignor for this Assignment Agreement $587,549
5. Deposit paid under this Assignment Agreement (in accordance with Page 1 of this Assignment Agreement): $200,000
6. Balance of the payment for this Assignment Agreement $387,549

[20] The plaintiff says that there was a mathematical error in Schedule B and that the deposit paid by the plaintiff to the builder in the amount of $174,685 should have been added to the total such that the amount due on closing would be $387,549 + $174,685 with the additional deposit in the amount of $150,000 deducted for a total on closing of $412,234.

[21] The defendants’ position is that they only owed $237,549 which is the balance under s. 6 of Schedule B of $387,549 minus the additional $150,000 deposit deducted.

[22] I agree with the plaintiff that objectively viewed, the funds that the defendants had to pay at closing included the $174,685 for a total of $412,234 for the following reasons:

• In bold print on the first page of the Assignment Agreement the parties acknowledge that the Purchase Price includes “both the purchase price the Assignor is paying for the property as indicated in the Agreement of Purchase and Sale between the Assignor [the plaintiff] and the seller of the property attached hereto as Schedule C, and also includes the amount being paid by the Assignee [the defendants] to the Assignor [the plaintiff] as payment for the Assignment Agreement.” Therefore, it expressly included the $174,685 paid by the plaintiff to the builder. It would make no sense to conclude that the Purchase Price includes this amount, but that it did not have to be paid by the defendants since payment of the Purchase Price is one of the defendants’ obligations, not the plaintiff’s.
• Section 3 of Schedule B specifically says that the deposit paid by the plaintiff was to be “paid by the Assignee [the defendants] to Assignor [the plaintiff]” [Emphasis added]. The defendants argue that the payment of this amount was effected by way of the payments listed below this statement in Schedule B, because the words “as follows” are used. However, the numbers do not bear this out.
• In that regard, prior to closing, the defendants had paid the plaintiff the two deposits in the amount of $350,000. At closing, the defendants would be required to pay the builder $1,582,765: ($1,757,450 – the $174,685 deposit paid by the plaintiff) [1], and only an additional $237,549 to the plaintiff according to the defendants. If I accept the defendants’ position it means that the total Purchase Price, or consideration paid including the assumption of the plaintiff’s obligation to the builder, is not $2,345,000 but rather $2,170,314: ($1,582,765 that would have to be paid to the builder at closing taking into account adjustments, the $350,000 in deposits paid by the defendants to the plaintiff, and the final payment to the plaintiff in the amount of $237,549 = $2,170,314.) Thus, the defendants’ position would mean that the deposit paid by the plaintiff to the builder was not included in the Purchase Price contrary to what is stated in bold print on the first page of the Assignment Agreement.
• The plaintiff’s position means that the Purchase Price, or consideration paid including the assumption of the plaintiff’s obligation to the builder, works out to be exactly what is stated to be the Purchase Price in the Assignment Agreement. That is, if the defendants also had to pay the $174,685 deposit on closing, they would have to pay total consideration of exactly $2,345,000: ($1,582,765 to the builder on closing+ $350,000 in deposits paid + $237,549 + $174,685 = $2,345,000)
• There is no reason to have set out the Purchase Price of $2,345,000 or set out the deposit already paid if the defendants are correct. If all that was required was the assumption of the obligation to the builder in the amount of $1,582,765 and the payment of $587,549, then the Assignment Agreement could have said that in clear terms.
• To give the Purchase Price meaning, the Assignment Agreement must be interpreted to require the payment of the $174,685 by the defendants to the plaintiff.
• Counsel for the defendants also argued that the parties agreed that the $174,685 was repaid to the plaintiff as part of the deposits paid and set out in Schedule B. The difficulty with this argument is that the deposit is not additional consideration, it is part of the total consideration or Purchase Price.
• Accordingly, reading the Assignment Agreement as a whole, it is clear that the parties’ objective intention was that the total Purchase Price included the deposit already paid by the plaintiff which means that this consideration should have also been paid by the defendants.
• To the extent there is an ambiguity, the parties’ subsequent conduct supports the plaintiff’s interpretation. Prior to closing, the plaintiff sent the defendant three Statements of Adjustment, all of which set out its position and the defendant did not ever write back and suggest that the $174,685 was not due on closing even though they did have communications about the closing date. I add that the defendants failed to provide any response to the plaintiff’s evidence in this regard. They could have but did not provide an affidavit from their lawyer explaining why he never responded to the three draft Statements of Adjustment explaining why he never disagreed with the calculation until after he closed with the builder. I am drawing an adverse inference because of the failure of the defendants to provide this evidence: Transamerica Life Insurance Company of Canada v. Canada Life Assurance Corp (1996), 28 O.R. (3d) 423.
• I add that it appears that the reason that the defendants took this position after closing was their feeling that the price they agreed to pay was too high. They wrote to the plaintiff seeking an abatement of the purchase price in the amount of $300,000 in November 2022 on the basis there had been a market decrease. The plaintiff rejected this request.
• Accordingly, I conclude that the plaintiff’s interpretation is the correct one and that there is simply a mathematical error in Schedule B whereby the parties failed to add the $174,685, which were expressly set out on Schedule B, and that were expressly required to be paid by the defendants, to the funds due on closing.
• I add that there is another mathematical error on Schedule B that no one has disputed. In that regard, the total in s. 6 also fails to deduct the $150,000 second deposit from the $387,549 due on closing and yet the parties have both recognized that this was required. The issue before me is a similar one, but in this case, there has not been a failure to subtract something but a failure to add it. In my view, the parties simply made a few careless addition/subtraction errors that should not be used to arrive at a result that they did not objectively intend at the time they entered into the Assignment Agreement.

Issue 2: Should partial summary judgment be granted?

[23] This summary judgment motion will not finally resolve this matter because the plaintiff says that he has suffered general damages as a result of the defendant’s breach. He describes significant hardship in his affidavit resulting from the defendants’ failure to pay the full amount but has not particularized these damages. He seeks to proceed to trial and prove them.

[24] I find that it is appropriate to grant partial summary judgment on the issue before me with a reference to an Associate Judge pursuant to r. 54 and 55 to determine whether the plaintiff has suffered any additional damages as claimed.

[25] Partial summary judgment will not give rise to a risk of delay, expense, inefficiency or inconsistent findings. In that regard, the issue of the closing funds required is a discrete issue dependent upon the interpretation of the Assignment Agreement which can be bifurcated from the issue of whether or not the plaintiff also suffered additional general damages.

[26] Thus, partial summary judgment removes a discrete issue to be tried, shortens the trial and the defendants have not raised a genuine issue as to the interpretation of the Assignment Agreement that requires a trial: D.G. Sports Inc. v. WWK Sportsdome Inc. (2010), 260 OAC 234 at paras 33-39; NDrive Navigation Systems S.A. v. Zhou (2022), 2022 ONCA 602, 472 D.L.R. (4th) 736 at paras 33, 37, 38 and 41.

[27] I add that the summary judgment rule implicitly suggests that determinations of liability with issues of damages remaining and to be determined at a later point is not the kind of partial summary judgment that should attract significant concerns. Rule 20.04(3) specifically directs that where the only genuine issue is the amount, the court may order a trial of that issue or grant judgment with a reference to determine that issue. This make sense because issues of liability and damages are typically discrete.

[28] I am satisfied that deciding this case by way of the summary judgment procedure is a proportionate, more expeditious and less expensive means to achieve a fair and just determination of the merits.

[29] Thus, I award the plaintiff partial summary judgment in the amount of $174,685 and am directing a reference to an Associate Judge to determine any general damages, if the plaintiff still wishes to proceed with this, pursuant to rr. 54 and 55.

[30] The parties may make submissions on costs and interest no longer than five pages each with the plaintiff’s due in 7 days and the defendants 7 days thereafter.

Papageorgiou J. Released: May 27, 2024

Footnotes

[1] This would always have been subject to adjustments whether it was the plaintiff or the defendants who closed the transaction.